Choice of CEO proves Target's chief target is food

FILE - President and CEO of Sam's Club Brian Cornell speaks during the Wal-Mart Stores Inc. shareholders' meeting in Fayetteville, Ark., in this June 4, 2010 file photo. Target Corp. is bringing in Cornell as its new chief executive, turning to an outsider for the first time in its history to repair a battered corporate culture and navigate a sea change in Americans' shopping habits. (AP Photo/April L. Brown, File)

FILE - President and CEO of Sam's Club Brian Cornell speaks during the Wal-Mart Stores Inc. shareholders' meeting in Fayetteville, Ark., in this June 4, 2010 file photo. Target Corp. is bringing in Cornell as

San Francisco Chronicle Business columnist Thomas Lee is seen on Wednesday, March 5, 2014 in San Francisco, Calif.

San Francisco Chronicle Business columnist Thomas Lee is seen on Wednesday, March 5, 2014 in San Francisco, Calif.

Photo: Russell Yip, The Chronicle

Choice of CEO proves Target's chief target is food

1 / 2

Back to Gallery

People in the Bay Area, at least in the business community, might recognize the new CEO of Target Corp. From 2004 to 2007, Brian Cornell served as executive vice president and chief marketing officer at Safeway Inc. in Pleasanton.

Aside from the local connection, Cornell's appointment should raise a few eyebrows for what it says about Target.

The second largest retailer in the United States, Target has struggled of late: Same-store sales have been flat or declining, its much ballyhooed entry into Canada has been a disaster, and the theft of personal data from millions of customers in December severely shook confidence in the Minneapolis company. Those factors led to Target's board forcing top executives to resign, including CEO Gregg Steinhafel.

Cornell's hiring marks the first time in Target's 50-plus year history that the retailer has chosen an outsider as CEO. The retailer normally prides itself in developing its managerial talent, so hiring an outsider like Cornell suggests that he brings something to the table that does not exist at the company.

But Cornell's Safeway experience is what Target really wants. For several years, Target has aggressively expanded into groceries, rolling out P-Fresh sections throughout its 1,800 stores in the United States. In fact, the grocery category has been the only consistently growing one in Target's arsenal, despite the retailer's reputation for on-trend clothing and home accessories.

Food is key to every facet of Target's strategy. To boost sagging traffic in stores, it has been trying to get customers to shop more often and buy more stuff. You need to buy groceries way more often than you need to buy shoes. Target's REDcard loyalty program, which gives shoppers 5 percent off purchases, encourages these types of stock-up trips. The retailer's new digital savings program, Cartwheel, initially focused on groceries.

As chief marketing officer at Safeway, Cornell oversaw marketing and merchandising at a supermarket chain known for these skills. It's probably no accident that under Cornell's three-year tenure, Safeway stock more than doubled.

Target CEOs have always been merchandisers, albeit ones cut from the company's department store heritage. The retailer is still getting a merchandiser - but someone who focuses on food instead of clothing.